Merrill Axes Two Funds Execs Over Trading
Scandal

September 10, 2001 (PLANSPONSOR.com) - A "series of
trading irregularities" which enriched some Merrill Lynch
Investment Managers' clients at others expense has led to the
firings of two senior executives at its funds management
business.

Merrill Lynch officials said the two executives failed
to properly supervise a currency trader who was accused of
diverting profits on foreign currency transactions to the
accounts of favored clients.

The trader had diverted losses on deals done for those
clients to the accounts of others since 1995, the company
said. The unidentified trader worked in Princeton, N.J. and
London before leaving Merrill in April.

Merrill spokesman Nigel Webb estimated it will cost
Merrill Lynch $10 million to reimburse clients who lost
money.

The trader?s actions could affect as many as 200
institutional clients, such as pension funds, corporations,
retail mutual funds and hedge funds, mostly in North
America and Europe, according to the WSJ.

As a result of its probe, Merrill fired Tim Manna, the
global head of its fixed-income unit, and David Jacob, who
was in charge of the division’s operations in Europe, the
Middle East and Africa.

The management shakeup led a third executive, Bob Browne
– co-head of the fixed-income unit’s U.S. business – to
resign, Webb said.

Webb declined to identify the trader but said Merrill
notified financial regulators in both countries – the U.S.
Securities and Exchange Commission and Britain’s Financial
Services Authority.

Webb said Merrill has taken “aggressive measures’ to
improve its financial control systems to prevent future
incidents from happening.